B-165634, DECEMBER 5, 1968, 48 COMP. GEN. 384

B-165634: Dec 5, 1968

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BIDS - BUY AMERICAN ACT - FOREIGN PRODUCT DETERMINATION - COMPONENT V END PRODUCT THE CLASSIFICATION OF EACH ITEM TO BE FURNISHED A GOVERNMENT CONSTRUCTION CONTRACTOR AS A SEPARATE END PRODUCT FOR EVALUATION UNDER THE BUY AMERICAN ACT AND THE AWARD OF A SINGLE CONTRACT IS WITHIN THE CONTEMPLATION OF PARAGRAPH 6-001 OF THE ARMED SERVICES PROCUREMENT REGULATION. A BID THAT WOULD BE A LOW DOMESTIC BID IF THE LINE ITEMS WERE CONSIDERED COMPONENTS INSTEAD OF END PRODUCTS IS NOT A RESPONSIVE BID. THERE IS NO SIMPLE ANSWER TO THE QUESTION OF WHAT CONSTITUTES AN END PRODUCT. - THE AWARD OF A SINGLE CONTRACT IS NOT DETERMINATIVE. CLASSIFYING ITEMS TO BE DELIVERED TO THE JOB AND ASSEMBLED BY ANOTHER CONTRACTOR AS END ITEMS IS A PROPER EXERCISE OF PROCUREMENT JUDGMENT.

B-165634, DECEMBER 5, 1968, 48 COMP. GEN. 384

BIDS - BUY AMERICAN ACT - FOREIGN PRODUCT DETERMINATION - COMPONENT V END PRODUCT THE CLASSIFICATION OF EACH ITEM TO BE FURNISHED A GOVERNMENT CONSTRUCTION CONTRACTOR AS A SEPARATE END PRODUCT FOR EVALUATION UNDER THE BUY AMERICAN ACT AND THE AWARD OF A SINGLE CONTRACT IS WITHIN THE CONTEMPLATION OF PARAGRAPH 6-001 OF THE ARMED SERVICES PROCUREMENT REGULATION, AND A BID THAT WOULD BE A LOW DOMESTIC BID IF THE LINE ITEMS WERE CONSIDERED COMPONENTS INSTEAD OF END PRODUCTS IS NOT A RESPONSIVE BID. THERE IS NO SIMPLE ANSWER TO THE QUESTION OF WHAT CONSTITUTES AN END PRODUCT--- THE AWARD OF A SINGLE CONTRACT IS NOT DETERMINATIVE, BUT THE PURPOSE OF THE PROCUREMENT PLAYING A PART, CLASSIFYING ITEMS TO BE DELIVERED TO THE JOB AND ASSEMBLED BY ANOTHER CONTRACTOR AS END ITEMS IS A PROPER EXERCISE OF PROCUREMENT JUDGMENT. BIDS - BUY AMERICAN ACT - EVALUATION - GENERAL AGREEMENT ON TRADES AND TARIFFS ALTHOUGH CLASSIFYING INDIVIDUAL ITEMS TO BE FURNISHED UNDER A SINGLE CONTRACT TO A GOVERNMENT CONSTRUCTION CONTRACTOR AS SEPARATE END PRODUCTS FOR THE PURPOSE OF BUY AMERICAN ACT EVALUATION MAY BE CONTRARY TO THE INTENT OF THE GENERAL AGREEMENT ON TRADES AND TARIFFS (GATT), THE CONFLICT IS NOT FOR CONSIDERATION IN DETERMINING THE LOWEST EVALUATED BID. UNDER COMPETITIVE BIDDING PROCEDURES, BIDS ARE TO BE EVALUATED ONLY ON THE BASIS OF FACTORS MADE KNOWN TO ALL BIDDERS IN ADVANCE AND THE INVITATION DID NOT WARN BIDDERS TO PREPARE THEIR BIDS IN LIGHT OF GATT AND ITS POSSIBLE IMPACT ON THE BUY AMERICAN ACT EVALUATION; ALSO THE APPLICABILITY OF GATT IS NOT A MATTER OF PROCUREMENT RESPONSIBILITY BUT RATHER IS FOR CONSIDERATION BY THE UNITED STATES TARIFF COMMISSION.

TO JOHANN J. LEPPITSCH, DECEMBER 5, 1968:

THE OFFICE OF THE CHIEF OF ENGINEERS HAS FORWARDED, AS YOU REQUESTED, YOUR LETTERS OF OCTOBER 14 AND 29, 1968, PROTESTING AN AWARD TO FAIRBANKS MORSE INC., UNDER INVITATION FOR BIDS DACW17-69-B 0010COVERING EQUIPMENT FOR A PUMPING STATION TO BE CONSTRUCTED AT A SITE IN FLORIDA.

THE BID SCHEDULE LISTED 10 ITEMS AS FOLLOWS:

1. VERTICAL PUMP COMPLETE 3 EA.

2. DIESEL ENGINE INCLUDING AUXILIARIES 3 EA.

3. SPARE PARTS FOR DIESEL ENGINES AND AUXILIARIES 1 SET

4. SPARE PARTS FOR VERTICAL PUMPS 1 SET

5. GEAR TRANSMISSION UNIT 3 EA.

6. FIRST PUMP MODEL TEST 1 JOB

7. ADDITIONAL PUMP MODEL TEST1 EA.

8. BACK FLOW CONTROL GATE 6 EA.

9. GATE HOIST 6 EA.

10. SERVICES OF ERECTION ENGINEER 250 MAN

(APPROX) DAYS THE SCHEDULE PROVIDED SPACES FOR THE BIDDERS TO QUOTE UNIT AND EXTENDED PRICES FOR EACH ITEM AND THE TOTAL PRICE OF THE EXTENDED UNIT PRICES. THE ABOVE ITEMS ARE TO BE FURNISHED FOR INSTALLATION BY ANOTHER GOVERNMENT CONTRACTOR CONSTRUCTING THE PUMPING STATION.

THE INVITATION PROVIDED THAT AN EVALUATION FACTOR WOULD BE ADDED TO OR SUBTRACTED FROM EACH BID DEPENDING UPON WHETHER THE PUMP EFFICIENCY PROPOSED BY THE BIDDER WAS BELOW OR EXCEEDED THE BASE EFFICIENCY STATED IN THE INVITATION. IN ADDITION, ALTHOUGH THE INVITATION PROVIDED THAT THE AWARD FOR THE BID SCHEDULE WOULD BE MADE AS A WHOLE TO ONE BIDDER, IT FURTHER PROVIDED THAT EACH SEPARATE LINE ITEM IN THE BID SCHEDULE WOULD BE CONSIDERED A SEPARATE END PRODUCT TO BE EVALUATED SEPARATELY UNDER THE BUY AMERICAN ACT, 41 U.S.C. 10A-D. THE INVITATION FURTHER DESCRIBED THE END PRODUCTS AND COMPONENTS AS FOLLOWS: FOR ITEM 1--- (VERTICAL PUMP COMPLETE). A MAJOR COMPONENT WOULD BE SUCTION BELL, PROPELLER, PROPELLER HOUSING, DISCHARGE BOWL (DIFFUSER ASSEMBLY), DISCHARGE ELBOW, OR PROPELLER SHAFT. FOR ITEM 2--- (DIESEL ENGINE INCLUDING AUXILIARIES). A MAJOR COMPONENT WOULD BE CYLINDER BLOCK, CRANKSHAFT, PISTON, CONNECTING ROD ASSEMBLY, TURBOCHARGER, SCAVENGING BLOWER, ENGINE BASE PLATE, OR INJECTION SYSTEM. FOR ITEM 5--- (GEAR TRANSMISSION UNIT). A MAJOR COMPONENT WOULD BE THE HOUSING, AN INDIVIDUAL GEAR AND/OR GEAR SHAFT ASSEMBLY. FOR ITEM 8 --- (BACK FLOW CONTROL GATE). A MAJOR COMPONENT WOULD BE A COMPLETE GATE WELDMENT OR A FLAP WELDMENT. FOR ITEM 9--- (GATE HOIST). A MAJOR COMPONENT WOULD BE THE ELECTRIC MOTOR, OR COMPLETE HOIST ASSEMBLY EXCLUDING MOTOR.

ALSO INCLUDED IN THE INVITATION WAS A REQUIREMENT FOR FURNISHING DESCRIPTIVE DATA INCLUDING A PRINT DRAWING SHOWING THE OVERALL DIMENSIONS OF MAJOR INDIVIDUAL ITEMS AND OTHER DIMENSIONS NECESSARY TO SHOW THAT THE EQUIPMENT TO BE FURNISHED COULD BE INSTALLED IN THE SPACE PROVIDED. THE DESCRIPTIVE DATA CLAUSE PROVIDED THAT IF THE INFORMATION FAILS TO SHOW CONFORMITY TO THE SPECIFICATIONS AND OTHER REQUIREMENTS OF THE INVITATION, THE BID WOULD BE REJECTED.

YOUR COMPANY AND FAIRBANKS MORSE INC. WERE THE ONLY BIDDERS. THE TOTAL BID FROM YOUR COMPANY WAS $1,065,117. THE TOTAL BID FROM FAIRBANKS MORSE WAS $1,092,909. BASED UPON THE PUMP EFFICIENCY EVALUATION FACTORS, THE TOTAL BIDS WERE EVALUATED AT $1,046,917 AND $1,079,609, RESPECTIVELY. THE BID FROM YOUR COMPANY STATED THAT THE THREE VERTICAL PUMPS IN ITEM 1 WOULD BE OF FOREIGN ORIGIN COMPLETELY. THUS, THE CONTRACTING OFFICER EVALUATED YOUR PRICE FOR ITEM 1 IN ACCORDANCE WITH THE BUY AMERICAN EVALUATION PROCEDURES. UNDER SUCH PROCEDURES, THE TOTAL BID FROM YOUR COMPANY WAS EVALUATED AT $1,256,551.

YOU HAVE PROTESTED AGAINST AN AWARD TO FAIRBANKS MORSE ON TWO BASES. FIRST, YOU CONTEND THAT THE BID FROM FAIRBANKS MORSE WAS NONRESPONSIVE TO THE INVITATION IN THAT ITS DRAWING 16500948, ACCOMPANYING ITS BID AS REQUIRED, DID NOT INCLUDE ALL THE DIMENSIONS REQUIRED BY THE DESCRIPTIVE DATA CLAUSE. SECOND, YOU CONTEND THAT THE BUY AMERICAN EVALUATION FACTOR SHOULD NOT HAVE BEEN APPLIED TO THE END PRODUCT ITEM DESIGNATED AS ITEM 1 IN THE INVITATION SINCE YOU BELIEVE THAT THE COMPLETE SCHEDULE OF ITEMS IS THE END PRODUCT AND THAT THE INDIVIDUAL ITEMS ARE MERELY COMPONENTS OF THE END PRODUCT. IN THIS LATTER RESPECT, YOU REFER TO THE FACT THAT THE INVITATION PROVIDES FOR AN AWARD IN THE ENTIRETY TO A SINGLE BIDDER. YOU CONTEND THAT THIS REQUIREMENT AND OUR DECISIONS 46 COMP. GEN. 813 AND 47 COMP. GEN. 21 REQUIRE THAT THE LINE ITEMS BE CONSIDERED AS COMPONENTS RATHER THAN END PRODUCTS. THE BID FROM YOUR COMPANY IS SUCH THAT IF THE LINE ITEMS ARE CONSIDERED AS COMPONENTS, INSTEAD OF END PRODUCTS, IT WOULD QUALIFY AS A DOMESTIC BID AS TO WHICH NO BUY AMERICAN FACTOR WOULD APPLY AND, AS SUCH, WOULD BE THE LOW BID.

THE CONTRACTING OFFICER HAS ADVISED THAT, ALTHOUGH THE FAIRBANKS MORSE DRAWING CITED BY YOU DOES NOT SHOW THE OVERALL WIDTH OF THE ENGINE AND GEAR REDUCER UNIT, INFORMATION WAS PROVIDED IN DETAIL IN PHILADELPHIA GEAR CORPORATION DRAWING 03-152-0022-4 AND FAIRBANKS MORSE DRAWING 50A8FB33 FURNISHED BY FAIRBANKS MORSE WITH ITS BID. ACCORDINGLY, THE INFORMATION APPEARS TO HAVE BEEN FURNISHED WITH THE BID AND THE FAILURE TO INCLUDE IT IN THE CITED DRAWING IS, AT THE MOST, A DEVIATION IN FORM WHICH IS NOT A FATAL DEFECT IN THE BID. ASPR 2-405.

PARAGRAPH 6-001 OF THE ARMED SERVICES PROCUREMENT REGULATION (ASPR) DEFINES "END PRODUCTS" AS ,ARTICLES, MATERIALS, AND SUPPLIES, WHICH ARE TO BE ACQUIRED FOR PUBLIC USE.' THE PROVISION STATES FURTHER THAT "AS TO A GIVEN CONTRACT, THE END PRODUCTS ARE THE ITEMS TO BE DELIVERED TO THE GOVERNMENT, AS SPECIFIED IN THE CONTRACT.' THUS, ASPR CONTEMPLATES THE POSSIBILITY THAT A SINGLE CONTRACT MAY COVER MORE THAN ONE END PRODUCT. THEREFORE, THE FACT THAT A SINGLE CONTRACT IS TO BE AWARDED IS NOT DETERMINATIVE OF THE QUESTION WHETHER ALL ITEMS IN THE CONTRACT CONSTITUTE THE END PRODUCT. THE DECISIONS CITED BY YOU INVOLVE SITUATIONS WHERE THE ITEMS UNDER CONSIDERATION WERE COMPLETELY ASSEMBLED BY THE CONTRACTOR PRIOR TO DELIVERY TO THE GOVERNMENT. HENCE, THOSE CASES ARE DISTINGUISHABLE FROM THE IMMEDIATE CASE SINCE HERE THE ITEMS ARE NOT TO BE ASSEMBLED UNTIL AFTER DELIVERY AT THE JOB SITE AND THEN BY ANOTHER CONTRACTOR. THE MAGNITUDE OF THE ASSEMBLY AFTER DELIVERY AT THE SITE IS DEMONSTRATED BY THE FACT THAT THE BID SCHEDULE ESTIMATES THAT APPROXIMATELY 250 MAN-DAYS OF ERECTION ENGINEER SERVICES WILL BE REQUIRED TO SUPERVISE THE INSTALLATION.

THERE IS NO SIMPLE ANSWER TO THE QUESTION OF WHAT CONSTITUTES AN END PRODUCT. THE PURPOSE OF THE PROCUREMENT AS DEMONSTRATED BY THE ENTIRE BID PACKAGE HAS TO PLAY SOME PART IN ARRIVING AT AN ANSWER. WHERE, AS HERE, A NUMBER OF SEPARATE ITEMS ARE BEING PROCURED WHICH EVENTUALLY WILL BE ASSEMBLED AND INSTALLED BY ANOTHER CONTRACTOR WHO IS RESPONSIBLE FOR CONSTRUCTING A PUMPING STATION USING THE EQUIPMENT BEING PROCURED UNDER THIS INVITATION AS GOVERNMENT-FURNISHED ITEMS OF PROPERTY, WE BELIEVE THAT IT WAS A PROPER EXERCISE OF PROCUREMENT JUDGMENT TO CLASSIFY EACH SUCH ITEM AS AN END PRODUCT FOR PURPOSES OF THE BUY AMERICAN ACT. THIS IS UNLIKE THE SITUATION CONSIDERED IN THE CITED DECISIONS WHERE THE ITEM BEING PROCURED WAS TO BE DELIVERED TO THE GOVERNMENT ASSEMBLED, IN WHICH CIRCUMSTANCES THE TOTAL UNIT WAS HELD TO BE THE END PRODUCT ACQUIRED FOR PUBLIC USE.

WE HAVE ALSO CONSIDERED YOUR LETTER OF NOVEMBER 25, 1968, WHEREIN YOU SUGGEST THAT THE PROPOSED APPLICATION OF THE BUY AMERICAN ACT TO THIS PROCUREMENT WOULD BE CONTRARY TO THE INTENT OF THE GENERAL AGREEMENT ON TRADES AND TARIFFS (GATT). UNDER COMPETITIVE BIDDING PROCEDURES, BIDS ARE TO BE EVALUATED ONLY ON THE BASIS OF FACTORS MADE KNOWN IN ADVANCE TO ALL BIDDERS. HERE, BIDDERS WERE ADVISED IN THE INVITATION THAT BIDS WOULD BE EVALUATED UNDER THE BUY AMERICAN ACT ON A LINE ITEM (END PRODUCT) BASIS. WHETHER SUCH EVALUATION CONFLICTS WITH GATT IS NOT FOR CONSIDERATION IN DETERMINING THE LOWEST EVALUATED BID. WE BELIEVE THAT SUCH IS TRUE ESPECIALLY SINCE BIDDERS WERE NOT WARNED IN THE INVITATION TO PREPARE THEIR BIDS IN THE LIGHT OF GATT AND ITS POSSIBLE IMPACT ON BUY AMERICAN ACT EVALUATION. THE APPLICABILITY OF, OR THE ALLEGED CONTRAVENTION OF, GATT IS NOT A MATTER OF PROCUREMENT RESPONSIBILITY, BUT RATHER IS FOR CONSIDERATION BY THE UNITED STATES TARIFF COMMISSION UNDER ITS STATUTORY RESPONSIBILITIES.